Murray Rankin: Getting a handle on Canada’s ‘tax gap’
March 28th, 2013 - 4:51pm
By Murray Rankin, National Post | 13/03/28
Every year, billions of dollars are squirreled away by Canadians in foreign banks, or through loopholes that allow those who can afford it to pay little or no tax. This means that some of our largest corporations and wealthiest citizens are putting the tax burden unfairly on our shoulders. Our smaller businesses also suffer since they cannot afford to take advantage of these tax havens. While there is general agreement that this is a major drag on the finances of the country, there has been little real action to address the problem.
That is why many were pleased to hear that the federal government was going to tackle this complex issue in the last week’s budget. However, when the details became clear, it showed that the Conservatives are simply taking baby steps to close some loopholes. This problem requires big strides and real action. We simply aren’t seeing that from the Conservatives.
The first step would be to estimate the amount of money that corporations and individual tax evaders are hiding — the so-called “tax gap.” But the Conservatives cannot even say how much money we are losing to these tax loopholes.
The Canada Revenue Agency (CRA) has made no effort to measure the size of the federal tax gap, and the Conservative government consistently has indicated that it has no intention of pursuing a tax gap estimate — despite the fact that this is routinely done in other developed countries such as the United States, the U.K. and Australia. The government must assume this responsibility as part of its obligation to provide fair taxation for all Canadians.
The Parliamentary Budget Officer has stepped in to address the problem by requesting the information from the CRA necessary to provide an estimate. However, his requests have been repeatedly blocked.
Back in Budget 2012, the Conservative government cut over 3,000 full time jobs from the CRA over three years. The Main Estimates for 2013-2014, tabled just last month, show a $100-million cut to the CRA. And last week’s budget showed funding for the Canada Revenue Agency to be cut by over $60-million.
Stopping tax evasion is a complex and time-consuming affair. Yet somehow, the Conservatives suggest that the CRA, despite having thousands of fewer employees and millions of dollars in cut funding, will be able to tackle this herculean task. Well this just isn’t credible.
Instead of cutting the CRA’s budget, the federal government should be working to ensure that the Canada Revenue Agency has sufficient resources to effectively prevent, investigate and prosecute cases of tax evasion. The federal government also needs to create an efficient system to identify and prioritize a process for continuously closing loopholes and developing tax laws designed to curb abusive forms of tax avoidance.
The government of Canada has a responsibility to protect Canada’s tax base. It is my sincere hope that, in the absence of political will on the part of the government to identify and quantify the tax gap, they will at least provide the Parliamentary Budget Office and the Finance Committee with the information they need to estimate the Canadian federal tax gap.
Murray Rankin is the MP for Victoria and the NDP Revenue Critic.